Green Cipherin' - What's Slowing the Mainstreaming of Green Building, and What Homeowners Can Do about It

MLSs (Multiple Listing Services) across the country are unveiling “green-field addenda” (GFAs) andsearchable fieldsto highlight green features. Twenty-five percent of new-home sales are ENERGY STAR-certified, and utility programs across the country provide rebates to overhaul the rest of the country's housing stock. Early data from places like the Pacific Northwest and North Carolina are showing that yes, in fact, there is a “green premium” – a price bump for homes with green features.

Green-building advocates feel like a green renaissance within home construction and renovation—an Emerald City – is on the horizon. But appraisers have been the big buzz kill at the party. As an industry, they’ve refused to assign higher valuation to energy-efficient features that save homeowners money on utility bills or create healthful environments.

What’s been missing, appraisers say, are data points to support higher valuations of those features, and lending underwriters able to reconcile higher appraisal values with federal lending guidelines.

GETTING ON THE GREEN-BUILDING BANDWAGON

The Appraisal Institute is hot on the trail, and last fall, it launched its"Residential Green and Energy Efficient Addendum,"a form for appraisers to identify any green and energy-efficient features of a house. Sandy Adomatis, an appraiser and Vice Chair of the National Education Committee for the institute, says that adoption among AI members has been slow. Of 80,000 licensed appraisers in the United States, only 23,000 are Appraisal Institute members, and of those, only 2.9 percent (667) have sought green certification. Yet the appraisers who are trained to get green features, love the addendum.

Adomatis identifies two critical pieces that need to fall into place for green appraisal data to matter – Fannie Mae and Freddie Macmustget on board by distinguishing green properties as specialized, and homeownersmustassert their rights when they want green features considered.

“What hasn’t changed is Fannie Mae and Freddie Mac coming into 2012 and recognizing that these energy-efficiency features have value,” says Boulder banker and appraiser Elizabeth Million. “There’s no specific area for underwriters to go to a site and find out what ‘PV’ is – what’s solar. So the underwriter can choose not to accept the appraised value. That, in my opinion, is why we need these data points.”

HOMEOWNERS’ BILL OF RIGHTS

Laura Stukel, a National Association of REALTORS “Green” REALTOR in Chicago with L.W. Reedy Real Estate, says that when homeowners are working with their lenders, that’s the time to request a green appraiser. “If you had a horse property, you’d want an appraiser who knew how to value a horse property. You need someone who can value green properties,” she says.

Adomatis says that the AI has green appraisal classes, tests and subsequent certifications – two for residential appraisers and four for commercial appraisers. Homeowners can request a “green-certified” appraiser from their lender. Sometimes, that request isn’t honored, though, because lenders don’t have the knowledge to fulfill it, or the people, she says.

“Unfortunately they’re using either their own ordering department within the bank or they use an appraisal management company. Neither category is looking at green construction as anything other than conventional," she says.

Adomatis notes that green appraisals are considered “complex” and that “general” or “trainee” appraisers shouldn’t be doing them. And yet banks and appraisal companies sometimes dispatch those less-skilled anyway.

LINE IN THE SAND

Adomatis says it’s completely legit for property owners to ask, “Are you a trainee, or are you certified? Have you had any classes in green construction?” And when the appraisal’s done, check it then – don’t wait until closing.

“The homeowner should ask for a copy of the appraisal as soon as they can get it,” says Adomatis. “Did they describe the property appropriately? If it’s green, do they describe the green features? If they didn’t describe it right, they probably didn’t appraise it correctly. Then go back to the lender.”

REALTORS and appraisers are working shoulder to shoulder to get green features valued, but there’s not a big push from lenders, says Adomatis. “I’d like to see the lenders do what we’ve encouraged the builders to do – network with all of us, networking and brainstorming together. The AI always invites lenders,” she says.

Ultimately, Stukel says the responsibility for getting green features valued falls squarely on the home or building owner. “You still have to manage the process,” she says. Working with green REALTORS and appraisers can flatten the learning curve.

Homeowners can present MLS “green-field addenda” to appraisers for inspection and review. For help in the Denver/Boulder metro area with a GFA (both Metrolist and IRES), contact us today. We have certified energy auditors who can fill the form out accurately. Info@eGreenContractors.com, 1.877.376.8953.